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Detroit Pensioners Face Miserable 16 Cent On The Dollar Recovery
If there is ever a case study about people who built up their reputation and then squandered it for first being right for all the wrong reasons, and then being wrong for the right ones, then Meredith Whitney certainly heads the list of eligible candidates. After "predicting" the great financial crisis back in 2007 by looking at some deteriorating credit trends at Citigroup, a process that many had engaged beforehand and had come to a far more dire -and just as correct - conclusion, Whitney rose to stardom for merely regurgitating a well-known meme, however since her trumpeted call was the one closest to the Lehman-Day event when it all came crashing down, it afforded her a 5 year very lucrative stint as an advisor. Said stint has now been shuttered.
The main reason for the shuttering, of course, is that in 2010 she also called an imminent "muni" cataclysm, staking her reputation once again not only on what is fundamentally obvious, but locking in a time frame: 2011. Alas, this time her "timing" luck ran out and her call was dead wrong, leading people to question her abilities, and ultimately to give up on her "advisory" services altogether. Which in some ways is a shame because Whitney was and is quite correct about the municipal default tidal wave, as Detroit and ever more municipalities have shown, and the only question is the timing.
However, as Citi's Matt King recent showed, when it comes to stepwise, quantum leap repricings of widely held credits, the revelation is usually a very painful, sudden and very dramatic one. This can be seen nowhere better than in the default of Lehman brothers, where while the firm's equity was slow to admit defeat it was nothing in comparison to the abject case study in denial that the Lehman bonds put in. However, as can be seen in the chart below, when it finally came, and when bondholders realized they are screwed the morning of Monday, Septembr 15 when the Lehman bankruptcy filing was fact, the move from 80 cents on the dollar to under 10 cents took place in a heartbeat.
It is the same kind of violent and anguished repricing that all unsecrued creditors in the coming wave of heretofore "denialed" municipal bankruptcy filings will have to undergo. Starting with Detroit, where as Reuters reports, the recovery to pensioners, retirees and all other unsecured creditors will be.... 16 cents on the dollar!... or less than what Greek bondholders got in the country's latest (and certainly not final) bankruptcy.
From Reuters:
On Friday, city financial consultant Kenneth Buckfire said he did not have to recommend to Orr that pensions for the city's retirees be cut as a way to help Detroit navigate through debts and liabilities that total $18.5 billion.
Buckfire said it was clear that the city did not have the funds to pay the unsecured pension payouts without cutting them.
"It was a function of the mathematics," said Buckfire, who said he did not think it was necessary for him or anyone else to recommend pension cuts to Orr.
"Are you saying it was so self-evident that no one had to say it?" asked Claude Montgomery, attorney for a committee of retirees that was created by Rhodes.
"Yes," Buckfire answered.
Buckfire, a Detroit native and investment banker with restructuring experience, later told the court the city plans to pay unsecured creditors, including the city's pensioners, 16 cents on the dollar. There are about 23,500 city retirees.
One wonders by how many cents on the dollar the recovery to pensioners would increase if the New York-based Miller Buckfire were to cut their advisory fee, but that is not the point of this post (it will be of a subsequent).
What is the point, is that creditors across all products, aided and abetted by the greatest credit bubble of all time blown by Benny and the Inkjets, will find the kind of violent repricings that Lehman showed take place whenever hope dies, increasingly more prevalent. And since retirees and pensioners are ultimately creditors, this is perhaps the fastest, if certainly most brutal way, to make sure that the United Welfare States of America is finally on a path of sustainability.
The only question is how will those same retirees who have just undergone an 84 cent haircut, take it. One hopes: peacefully. Because among those whose incentive to work effectively has just been cut to zero, is also the local police force. In which case if hope once again fails, it is perhaps better not to contemplate the consequences. For both Meredith Whitney, who will eventually be proven right, and for everyone else.
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No, the key to you is that taxpayers make up for the blatant theft that was going on in plain sight to the unions and anyone who wanted to look.
"That's why I prefer to focus on the people who stole the money,"
So you are focusing on the government?
Bond holders have a contract. The current POTUS told them to go get fucked while he was stealling tax dollars to give to the UAW. Contracts mean nothing then, contracts mean nothing now when it is public sector worker contracts.
Obama and his ilk can not have it both ways.
By not honoring the bond holder contracts he and the SEIU and all other 1 party city governments which have robbed their taxpayers for years can not claim their contracts should be honored.
Or can you point me to all of the public sector workers who came to the support of the bond holders when their contract was not honored?
And because the money was stolen the taxpayer has to pay for that, right?
What's wrong with you ?
Where did I say the taxpayer has to pay for it? We already did. What I'm saying is to collect the "missing" money from the people who stole it and then use that money to help defray the losses to the pensioners. Put simply, take back the taxpayer money TBTF stole. What problem do you have with that? Do you not mind that your tax money went directly to TBTF, or do you only get mad when the little guy who reports to work "steals" your taxpayer money?
so if you take the money from the TBTF and replenish the pensions with it, the taxpayers are STILL paying for it, yet you say "Where did i say the taxpayer has to pay for it?" who will offset my IRA losses from 2008, my house equity decline and my higher taxes to supplement Detroit's losses? robbing peter to pay paul is not right if you instead rob peter to pay someone besides paul. and if you want to see where some of the blame lies for Detroit's pension problems, check into the decades of corruption on their pension board, and the dozens of politician-induced pension investments that flopped. have you not heard of Kwame Kilpatrick, Coleman Young, Monica Conyers (the sleezy congressman's imprisoned, taxpayer-provided-lawyer Detroit city council wife)?
The ideology is obviously strong with you.
Look, I'll say it one more time. The tax money I want to take back from the bankers was already paid into the system. If your issue is that you want to take back the tax money stolen by the bankers and give it to yourself, that's a different debate. Can we agree that the tax money stolen by the bankers should be taken back, or does your ideology force you to focus exclusively on the worker bee and give the bankers a pass?
Stop the government from stealing money from taxpayers and you stop the Elite from stealing from taxpayers.
Government stealing, which is only people stealing, is antecedent to the Banksters stealing, who are also people stealing.
The money changers existed and stole long before there was elected government. And before the money changers existed, Kings and Queens forced their subjects to pay tribute (taxes). And before that, the guy with the biggest club forced others to hunt and gather for him. Your desired system where everyone just gets along and acts legally in a heirachy free world has never existed and never will. To begin and end all debate about how to fix our society with a unicorn-bullshit-empirically-disproven solution is to set yourself up to fail. But if your goal is simply to shut down all intelligent discourse and focus people away from the real problem like banksters corrupting elected officials, I suppose you've got that down in spades.
tax money should not have been given to bankers. it should also not be given to pensioners from random irresponsible cities. why do you think any retrieved, ill-begotten tax money should just be given to someone else? the subject here is pensions, not bankers, so why do you draw incorrect inferences about my ideology?
"the subject here is pensions, not bankers...."
So your solution to this mess is to invent a time machine and start over and not have the pensions that were promised 40 years ago, rather than talking about where the money that was supposed to fund those pensions went? How very constructive.
Do you agree or disagree that if bankers stole tax money it should be taken back by force?
again, the headline subject is Detroit pensions and public pensions in general. yet you insist on engaging in discussions of the relative morality of pension bailouts vs. banker bailouts. silly ass time machine comment aside, don't try to obfuscate the pension fraud and waste discussion with the bankster bailout topic. and the solution is taking place now - it's called bankruptcy.
Where did I suggest a pension bailout? What I suggested was taking back the money that was stolen by bankers. Only a banker would see that as a "pension bailout."
So the bankers get the keep the money, then? Can you answer that simple question or can I assume by your refusal to answer that your answer is "yes, they get to keep the money."
you suggested a pension bailout above when you said to take the money stolen by the bankers and use it for the pensioners. or are you too busy babbling senselessly to remember? and i'm not a banker, the banks should be prosecuted and the money confiscated, the banks bankrupted, the Fed dissolved, etc. but the pensioners are not innocent po-folk as you imply, but active participants in an unsustainable system.
Taking the money back that the bankers stole from the pensions and using it for its original purpose -- funding the pension plan -- is a "pension bail out?" Wow. Congratulations on taking their propaganda to the next level.
you're like some selective Robin Hood who speaks only for the pensions. in the screwing of the pensioners, others were also screwed - retirees, business owners, IRA holders, GM bondholders, municipalities, homeowners, mortgage bond buyers, college funds. all of these individuals have taken their haircut, yet you only cry for the those in the other collective group of public union pensions. hypocrite.
You've got to be kidding me. I scream for taking back what the bankers have stolen from all of us in every possible context. I am a business owner and have no dog in the public pension fight other than seeing the bankers divested of their ill gotten gains, trying to preserve what is left of the middle class, and trying to change the debate away from the victims to the victimizers. You are simply an uninformed ideologue who selectively pays attention and gets his butt hurt when his ideological bullshit is called out for what it is.
Indeed. A large part of the Pension Problems are directly caused by the crooked big-city pols who invested the workers' monies in scams with no chance of return, only a large bribe to the pols up front.
It wasn't money that was stolen. It was a promise, a contract not kept.
If 50% of marriages fail, why would union members think union leaders or a mayor would be any more faithful over time?
Do not trade your ability to provide food, shelter, or health care to your family for a promise, especially an un-secured promise, and especially not an un-secured promise that depends on a fiat, over-printed currency.
The pensions were never fully funded, so there was no money to steal. A lot of state and local govts make pie in the sky pension promises that can never be funded fully without taxing the public into oblivion. In a lot of states labor is now the largest cost for govt and has squeezed out capital investment in infrastructure. So while they should do their best to preserve money funded, most govt employees are only going to get 50 to 70 of the pension in the best case where they receive 100 cents on every dollar invested. Wall Street deserves a ton of blame, but the govt pensions are union and local govt self destruction. They were too greedy and in many cities , it is the pensions that will trigger bankruptcy. Then the issue is, do politicians pay cops, firefighters and teachers, or fire them to pay retirees? Easy decision.
Bang on. There is a misunderstanding underlying some of the comments. The "money" to satisfy obligations is not there and it was never there. It didn't go to TBTF banks or Wall Street - it was projected to be created through unrealistic return assumptions which never came to fruition. The blame comes in at all levels because we have all known for a long time that these obligations won't (can't) be met.
The money that was stolen by the government from the taxpayer and paid in to fund the pensions, was stolen by TBTF.
Now it's fixed.
Let the Detroiter's eat their liberalism to the bone! They elected liberal leadership, who overpromised and underdelivered, sound familiar? Anyone investing in that monstrosity of failure, is just as idiotic, and should lose too.
Unions and brain dead liberals ruined that once fine city, extortion and welfare run that city, just like Chicago.
Let them raze the place and start over, best possible scenario.
Why do you and so many others talk like knocking down some buildings and houses is the cure to Detroit's problems?
I never saw a turn of the century brick tudor rob a liquor store.
In Detroit the majority of street crime is done by white males, who vote Republican, while wearing a t shirt showing their support for the NRA.
Double post.
I completely understand that sentiment and I too get frustrated at times. However consider this: In Scranton PA, who has as its title "Pennsylvania's Progressive City", the mayor, who is a staunch Democrat, unilaterally declared that all public workers, regardless of their pay schedule, are now working for minimum wage. Boom. Just like that. He said there was no money left to pay them. My question is this: Did that happen overnight? What kinds of agreements were being made on behalf of public workers that were unreasonable, and why is there now only monetary fall out on the public workers and not the mayor nor city government?
Its all lopsided, I agree. Unfortunately, public pensioners in NYC are going to face the very same pitfalls. So some teacher who retired ten years ago is going to be told that all of his retirement plans are now cancelled and to start scrambling for something else.
@ Fonz
The only contract that is enforcible is reality and that has been put under a lot of pressure lately.
So we can agree that this whole "free market" ideology based entirely on the supposed right of people to enforce contracts is all bullshit then?
LMAO people keep screaming "Its the liberals, its the liberals" without paying any attention at all to how public union workers have been treated by liberal democrats on a state, county, and city level. Cuomo attacked public unions with a machette. The very first item Sacramento put on the chopping block in their seeking bankruptcy was public union wages and pensions. This is not a political orientation question, this is a morality question.
Really? How many fellow revolutionaries were murdered by their enlightened leaders? This kind of pure ideology that is based on some utopian vision of how things should be will not be hindered by the sacrifice of their true believers, be they Maoist, Marxist, muslim or any other. The beauty of it is it doesn't seem to deter the followers, it seems to actually harden their devotion, like they are being tested by fire. Unions have been losing ground in non public industries for years yet they push even harder. Significant numbers of massive pillaging have been exposed in public unions and everyone acts like it didn't happen or doesn't matter. we are arguing about contracts. Are you going to be that defensive of jamie Dimon when he is pushing for fullfillment of his contract when he finally gets the boot (praise the day)? The problem is corruption...from top to bottom and defending one in favor of another is a waste of time.
Its only bullshit when we try to suspend the rules of reality with contracts completely detached from reality. Anyone could look at most of these contracts and see they couldn't work, but they paid for the best "experts" they could find to explain how through th ecorrect lenses it could come to pass. Nobody gave a shit because they knew they would not have to be the ones that answered for it. Reality is pretty simple. The hard part is ignoring it and surviving. That's something you should have learned from Ayne Rand. A is A and ignoring it is commiting suicide.
So I guess in Nevergoingtohappen land of pure "free" markets, Oldwood gets to decide which contracts are valid and which are not based on his subjective view of reality? Sounds fair to me. Let's scrap our system of laws and put Oldwood in charge!
Its about time you saw the light! Actually I do not want any authority over any person, I just want we all want, to be taken seriously and have the respect of my fellow person. I ask nothing of anyone that I am not willing to reciprocate.
There is no contract that can promise blood from a rock and be enforced. You know all contracts are not created equal so don't act like because we see public union entitlements caving in on themsleves that all contracts are useless. Besides we know that a contract has never been worth anymore than the person signing it and the lawyer they hire to invalidate it.
And what about the good faith of those who entered into legally binding contracts with the city to provide goods and services (instead of labor)?
This is what we must all accept and understand. If we participate in this sham we will hold responsibilty for it and suffer the consequences. How many "contractors" are lined up with lucrative contracts to supply our government, and then come out screaming when the gove shuts down for two weeks? We are faced with an impossible situation where we cannot gain control of this ongoing disaster as too much of our economy is dependent on th emoney train continuing. I do not fear the muni bonds collapsing. I fear what our government will do to stop it
The Contracts are invalid, anyway.
One party ... ME ... was forced to attest to a contract which made me liable to pay for someone else's pension.
As I understand things, one of the elements of a valid contract is that it be entered into freely.
you voted for the politician but not the contract." these things never end well so what gets left behind when the Party is over is as important as what you do while the Party is going on. that's why land...and the freedom to work it as you see fit...are the only two things of economic or "financial" value in this world. everything else is a license to steal. India paying 100 bucks over spot per ounce of gold? give me a break. this world lacks at a minimum honesty among many other moral (or logical) components. don't get me wrong...if I'm Elon Musk I'm selling a product and "we're going to get there and here's how." if you fail at least you fail with a plan. but this song and dance should be nothing new to the folks running the dog and pony show. are you telling me "here we go again" again?
As it happens, I have long refused to vote ... or even register to vote.
But, even if I did "vote for the politician" ... the contracts were still made fraudulently. There was never full disclosure of the terms; which is another essential element of a lawful contract.
You might then resort to claims of "Social Contract" ... but what standing does a Social Contract have, when it is created by Force and compulsion?
The whole thing is a charade and we all bear some guilt, I suppose.
I completely understand the frustration/anger with those types of arrangements. However, any contracts must be considered to have been drawn in good faith and be honored. Otherwise we should just drop the charade of working contracts.
Oy Vey. Are you ten years old and your business experience limited to mowing neighborhood lawns and shoveling their snow? Ever signed a binding contract? No, of course not, you'd have to be 18.
You obviously don't understand what happens when an entity cannot honor contractual commitments due to lack of funds.
Look up the meaning of the legal terms Bankruptcy and Force Majeure.
How do you get blood out of a stone? Contract law recognizes this and says that you don't, and can't.
If a person is foolish enough to rely on promises that can't be kept, then fault lies with them for being stupid.
Our entire world economy is a Ponzi Scheme and just like in poker, if you don't know who the sucker is, it's you.
What I expect to happen is happening. Purely and simply put, contracts will not be honored. It is happening across the board regardless of the political bent of the politicians in change. Even Cuomo has had his fight with unions that were much harsher than the gov of Wisconsin had wth his unions. The worst betrayal of unions was by a democrat mayor in a democrat town in a democrat state. Obviously you don't get blood out of a stone. Pension obligations, which are not obligations at all because the state can easily do away with them, coupled with ever increasing reliance on the state for basics such as food, clothing, and shelter, is what will cripple each state until it all cascades as in a domino effect. Eventually more people will do what Fonz and I have done, move out of highly costly tax sucking areas. That's when the rest of the country will all start looking just like Detroit.
and don't think the Governor of South Carolina et al don't know it. "don't worry Wall Street will fix it" only works...until it doesn't.
"Federal employees should get less, much less." As should State / Local Police, Firemen and Union's Pensions. When enough of the above get their haircuts, they will get out the guillotines and gallows on the Washington Commons for the Lawmakers and Banksters. First five to be guillotined.... Eich Bin a Bullshitter Obama...Henry Paulson, Timmy, Jamie and Loyd http://www.zerohedge.com/contributed/2013-10-26/theres-something-about-m...
Let them eat LetThemEatRand, all bitter and stringy.
No way! It's about buying the votes in DC/VA/MD and keeping the political illusion alive. .....and the minority voting block in tact.
I live in Maryland and have property in Indiana. The only way, and I mean the only way at all, that Baltimore is going to be saved is by publically financing a huge gentrification program and eliminate no-rent-increase agreements. This is what is happening in Georgia, South Carolina, New York, and elsewhere. If they cannot attract tax payers with big ticket rennovated houses, safe neighborhoods, and facilties, then are going the way of Detroit. As Laws loves to say "Tick tock, motherfuckers".
PS Please keep in mind that the gov'r of Maryland announced a few years ago that he was restructuring the tax code to ht millionaires in the state hard. He drew a lot of applause for that, but when the rubber hit the road, his cluster of millionaires had all but disappeared.
How high are Federal pensions? I think I will google it and try to compare them with city workers. Could be very revealing!
Exactly. I discussed the matter with firemen and they lash back with quite quite a bit of arrogance, "It's in the state constitution, they can't change it".
These guys were making about 6 figures in pensions. Teachers were the same.
The government pension system has become another bigger form of entitlements.
Many of these pensioners double-dipped. A number of them have 2 government pension checks.
"Public Servants"
Hahahahhahaha!
Fuck them. They were overpayed, gamed the system to screw the taxpayers, sold their integrity to the politicians they elected, and now they can suck a donkey.
They, like the bankers and everyone else, have been playing the game by the rules as they saw them. If I bought a lotto that was to pay out the big bucks and then after I had won, they tell me they haven't the money, you can bet I would be pissed and it would have nothing to do about having earned it. I played by the rules and won. Everyone is trying to win the lotto now days as no one sees the point in working for it as that is the loser's game. We shall see.
Here Teachers get. Full Social Security, A State Teachers Retirement Pension, A School District 401K plan with matching Funds. That is three plans, added together, they make most retired teachers rich by Middle Class standards. How do I know? There are 3 retired teachers in my immediate family. Their life style is amazing. 62 years old and one is occupied with building their dream home on a lake. Very huge, very richly decorated, all the add on's. 3 car garage, a boat house, a dock, a summer house on the water. You name it. When most people are scaling back to live on their pensions, like I will have to do, the teachers in the family are going full bore into a life style of the rich and famous. Why do I know I am right about this claim??? Because I can see it with my own eyes. After returning from a month's grand tour in Europe, a retired teacher who is a friend of the family, decided to by water front property and follow my realtion's lead, and begin to plan a dream home, with a special room for each adult kid to come visit. They are nearing 70! Believe the tax payer is getting fucked? You better believe it! If you are not one of these select, you are one of the fucked. WHo pays these pensions? The home owner, vis proerty taxes.
We are the 99%, we are the fucked!
Fonz
I repeat my comment on another post about my neighbor.
Back in 04 or 05 as the eye of a hurricane was passing overhead ,that
neighbor was outside polishing her doorknob, and sweeping her drive.
Send her over, I have a knob that she can polish.
i guarantee one look at her would shrink your need.
I am far from liberal on several levels, but I have to say this: Once a schedule of pension benefits are agreed upon and the work is completed to secure those benefits [as is retirement] it is the first obligation for the city/state/business to honor those agreements. This is more strikingly true for public pensions as well. Unions now represent a very small sector of the US labor pool and their enrollments are diminishing no matter how hard they struggle to make their 'tents' even broader to include as many people as possible. This is not the fault of unions, the pensioners, nor Chupacabre. An agreement was made and must be honored, otherwise what is the point of even considering one's future when working?
I can't think of how horrible it must be to be 75 and find out those work agreements you made long ago and you honored are now in question.
> Once a schedule of pension benefits are agreed upon and the work is completed
Agreed to by whom? The parasitic politicians and public sector unions?
How about those who're supposed to pay for that shit?
You voted them in and allowed them to keep setting up this shit. You don't like those agreements, do something about the NEW ones. If you are suggesting that contracts can be rewritten at your whim... well, you sir are a statist.
Rule of law bitches, you can't have it both ways, pissed when people break the contracts you like and pissed when they don't break the contracts you don't like. Unfortunately, too many politicians think just like you do... Constitution? I don't like that law so I'm just going to... "renegotiate" it...
That's the whole point of the Rule of Bankruptcy Law, finding an equitable division of "what's left" amongst all those who have a claim to such assets, and right now it looks like 16 cents.
Yep, I agree with you fully, but what we have here is a failure to communicate... some men always focus on the wrong target for their wrath. They blame the unions or even the politicians (who are but puppets on a string) for the sad state of affairs we are currently facing.
Contracts are not the problem, the monetary system is the problem and the only way to "solve" the problem, is to deal with those who control the monetary system. The current monetary system is breaking the rule of law; it steals, it murders, it destroys the rights of individuals and it destroys society.
The contracts *are* the problem. Dotgov workers bribed the politicians to enter into those contracts. Grotesquely generous salaries, benefits, and work rules were procured through bribery and fraud. Negotiations were done without the tax donkeys knowlege and consent.
What was done was no different than some third world, tinpot dictator selling off, for his own personal benefit, the country's gold or water or diamonds, and then faulting the citizens when they demur.
"Oh, but look. It's a legally binding CONTRACT. A CONTRACT!" You do believe in contracts, don't you? And the rule of law? And the moral obligation to honor your debts?
Wrong. You guys focus on the wrong enemy, but perhaps that is what you are paid to do...
Whatever... Tired of talking to the closed minded.
Dumb ass. These fools are trying to force the public, who did not voluntarily execute a contract, to pay for an agreement between them and the politicans the unions shitheads supported. How about if my brother and I make a contract that requires you to pay us - think that should be enforced?
Again, sans ad hominem, you voted for them to represent you and all that entails. This is on you as much as anyone else.
Even if you didn't vote for them, you allowed them to stay in power by your complacency, ergo, you agreed with the contract.
lol at the downvotes. No one likes to know they are responsible... it is always someone else's fault. You know, you sound exactly like those you despise... irony, that you won't likely get.
Why would a public sector union agree to a lesser pay schedule than they can actually agree on? Unless you are going to tell me that the NYC Union of Sewer Workers is a cleverly disguised leftist/marxist think tank hell bent on destroying NYC then you must agree the fault lies with the politicians who enacted these contracts.
The world is full of useless idiots and they are all motivated much less by ideology than personal gain. Public union employees quite obviously could care not what cost their wages represent to the public at large. As you say, they are in it for what they can get. The destruction we constantly see in society is almost always driven by the need for the good deal, the something for nothing, the advantage over your neighbors without having to try too hard. After all, its just about me...and maybe mine.
THe fault also lies with the dumb ass unions who gave up money in the hand today in exchange for a promise to screw future tax payers who weren't around when the "contract" was agreed upon. Time for those shitheads to sell their boats, cabins and RV's and start working for a living again.
You are correct, but there is no way they could have made contracts that gave it all to them in the here and now because it would have hit a wall of public opinion not to mention they simply didn't have the money. Local government's are notorious about cutting public services to pressure the public into approving higher taxes (always levied on others). It was always a gamble to any cognizant human that there was a significant chance their promises would never come to pass. You have to think that way when dealing with something too good to be true. But of course it doesn't take long to accept it as reality and mentally justify it, so when it does turn out to be flimflam, they are even more enraged. I always find it surprising that those that have free shit taken away are much more upset than those who have their earnings stolen. I guess it is becasue earners know they can earn more and know better than to believe in fiction whereas the FSA people know if the free shit is gone they have no other recourse and it destroys their whole view of the world, that you can get something for nothing and deserve it.
Yes I'd like to take out a loan on my neighbors house. He's good for it I promise.
"vini vidi vici"
Fault? If the (public) unions and (public) pensioners, as well as the Chupacabra have ignored the effect of the huge tax burden that their ever-increasing salary and pension packages impose on ordinary businesses and private citizens, then they are a big part of the problem. They have "pocketed" (or at least thought so, in the case of Detroit) a disproportionate share of "socialized" plunder.
+1 for Chupacabra reference. The biggest problem facing this country is that the made up numbers of projected revenue streams for cities are the purposefully deluded dreams of politicians and big business combined. They willfully ignore reality when they base pension pay schedules on something that does not exist and everyone has to pay for it in one way or another. What do you think is the projected revenue stream for Sacramento that was 'guessed at' ten or fifteen years ago upon which pension plans were based? I bet it was something like the entire revenue stream of small countries.
I am a retired policeman. I have been worrying about this for years. All the state legislature has to do is pass a new law and voila! Big haircut. Psople believe in the normalcy bias. It's their religion, their safety net.
I hear u lunatic. It's going to happen. Wall street stole all they could while the unions voted themselves everything they could. I hope for your sake when those pensions get slammed u at least get the benefit of seeing the guillotines rolled out for the bankers.
It is what it is. It's gonna hurt.
the whole empire was built on stealing and enslaving. it will only stop, when 0.4 of the population own 100 percent of the earth. Here is how it has been done:
Cristopher Columbus
I have determined to write you this letter to inform you of everything that has been done and discovered in this voyage of mine.On the thirty-third day after leaving Cadiz I came into the Indian Sea, where I discovered many islands inhabited by numerous people. I took possession of all of them for our most fortunate King by making public proclamation and unfurling his standard, no one making any resistance. The island called Juana, as well as the others in its neighborhood, is exceedingly fertile. It has numerous harbors on all sides, very safe and wide, above comparison with any I have ever seen. Through it flow many very broad and health-giving rivers; and there are in it numerous very lofty mountains. All these island are very beautiful, and of quite different shapes; easy to be traversed, and full of the greatest variety of trees reaching to the stars. . . .
In the island, which I have said before was called Hispana, there are very lofty and beautiful mountains, great farms, groves and fields, most fertile both for cultivation and for pasturage, and well adapted for constructing buildings. The convenience of the harbors in this island, and the excellence of the rivers, in volume and salubrity, surpass human belief, unless on should see them. In it the trees, pasture-lands and fruits different much from those of Juana. Besides, this Hispana abounds in various kinds of species, gold and metals. The inhabitants . . . are all, as I said before, unprovided with any sort of iron, and they are destitute of arms, which are entirely unknown to them, and for which they are not adapted; not on account of any bodily deformity, for they are well made, but because they are timid and full of terror. . . . But when they see that they are safe, and all fear is banished, they are very guileless and honest, and very liberal of all they have. No one refuses the asker anything that he possesses; on the contrary they themselves invite us to ask for it. They manifest the greatest affection towards all of us, exchanging valuable things for trifles, content with the very least thing or nothing at all. . . . I gave them many beautiful and pleasing things, which I had brought with me, for no return whatever, in order to win their affection, and that they might become Christians and inclined to love our King and Queen and Princes and all the people of Spain; and that they might be eager to search for and gather and give to us what they abound in and we greatly need.
'the man eating myth' by arends. he is hilarious about mr. columbus. this is our mankind history. murder and rape.
You left out theft.
And enslavement.
I wonder if there's any way for a pensioner to factor/sell their future stream of payments for a lump sum to wall street?
Or at least short the municipal bonds of the cities they worked for.
"I speak to several NYC pensioner's. They have no reaction to this. It can't happen here." -- fonz
Detroit should - as happened in NYC - arrange for terrorist airliners to crash into some marginal real estate so as to acquire some insurance and federal dollars for reinvestment.
"I gots mines!"
"He gonna pay mah mort-gauge an' fill up mah tank!"
You know, here in Belgium I've got the exact same reaction from civil servants who tell me: "Look, it is simply inconceivable. We will always, always, you hear, get our pay and our pensions. We have a contract, it is - so to speak - carved in stone and there is no way our government would ever renege on that commitment, because it has never done so in the past. "And what,' I then ask them, "happens when the state simply no longer has the funds to pay you, nor finds the international creditors to finance its expenditures? What happens then? When there is literally no money available to continue to fund all this? Are you still going to be paid then?" Then they just look at me as if I am stark raving mad and I continue: "Because you do know, I hope, that this is exactly what is now happening in one of our own member states, Greece?" Upon which they react: "O yes, but Greece is and has always been a failed state". You see, the people here just do not seem to get that Greece is merely the first domino to fall because they have been the biggest abusers. It is almost fascinating to see how people in my own country are literally incapable of wrapping their heads around the possibility that the current state of affairs is unsustainable or could quite suddenly change or degenerate. Normalcy bias, I suppose?
Normalcy bias, I suppose?
Yah!
Herding aka Groupthink
Optimism Bias
Normalcy Bias
... but, most importantly, per Kubler Ross, the first stage of Grieving is Denial.
Zerohedgers gotta be smarter than this. No one has heard of the Pension Benefit Guarantee Corp? Any one know who funds this.... Thats right taxpayers in Texas will be paying for detroits pension. Net haircut will be about 30 percent....
'
They are (smarter than this). The PBGC doesn't cover public pensions.
Having said that, I don't believe that there will be any haircut at all.
Remember, there's more of them than there is of us.
The (fiat) money *will* appear somehow. Probably pursuant to the Pension and Puppies, Welfare, and Social Security Preservation Act. (We need Boris here.)
This was all predicted 26 years ago by Dutch film director Paul Verhoeven and writers Edward Neumeier and Michael Miner in Robocop. I think the cops at the poilce dept were bitching about pay cuts and their pensions.
Oddly enough the film was shot in Pittsburgh and Dallas plus an old steel mill outside of PA.
freddie, ur knowledge of Hollywood movies is impressive........u fucking serf!
This was predicted forty years ago by a French author (forgot the name) in Camp of the Saints.
And even earlier and since in the pages of the Natiional Review.
And by me even earlier.
And by any third grader proficient in arithmatic.
Unions are for union management and their political hand-maidens, not the membership. They only need produce a dog and pony show at contract time, everybody gets something, then its back to the PR for golf for the union elite.
FORWARD SOVIET!
And here is that wealth confiscation plan in black & white.
http://www.forbes.com/sites/billfrezza/2013/10/15/the-international-monetary-fund-lays-the-groundwork-for-global-wealth-confiscation/#45aa3a
Excerpt:
The International Monetary Fund (IMF) quietly dropped a bomb in its October Fiscal Monitor Report. Titled “Taxing Times,” the report paints a dire picture for advanced economies with high debts that fail to aggressively “mobilize domestic revenue.” It goes on to build a case for drastic measures and recommends a series of escalating income and consumption tax increases culminating in the direct confiscation of assets.
Yes, you read that right. But don’t take it from me. The report itself says:
Move“The sharp deterioration of the public finances in many countries has revived interest in a “capital levy”— a one-off tax on private wealth—as an exceptional measure to restore debt sustainability. The appeal is that such a tax, if it is implemented before avoidance is possible and there is a belief that it will never be repeated, does not distort behavior (and may be seen by some as fair). … The conditions for success are strong, but also need to be weighed against the risks of the alternatives, which include repudiating public debt or inflating it away. … The tax rates needed to bring down public debt to precrisis levels, moreover, are sizable: reducing debt ratios to end-2007 levels would require (for a sample of 15 euro area countries) a tax rate of about 10 percent on households with positive net wealth. (page 49)”
Note three takeaways. First, IMF economists know there are not enough rich people to fund today’s governments even if 100 percent of the assets of the 1 percent were expropriated. That means that all households with positive net wealth—everyone with retirement savings or home equity—would have their assets plundered under the IMF’s formulation.
Second, such a repudiation of private property will not pay off Western governments’ debts or fund budgets going forward. It will merely “restore debt sustainability,” allowing free-spending sovereigns to keep tapping the bond markets until the next crisis comes along—for which stronger measures will be required, of course."
How are the Germans going to react when the IMF comes for their money?
"One-Off?"
Hhahahahahahaha!
The wheels are coming off the fiat & FRB Bus, and although it is clear to what lengths TPTB will go to, it seems that the peasants will happily blame other peasants, rather than roll the guillotines.
ADHD Nation of soft micro-serfs. Nothing will change at this rate.
I have a plan that anyone could get elected President on.
Corporate taxes.
35% if your manufacturing is overseas.
10% if your manufacturing is back at home.
You have to incentivize.
Good plan but it won't ever get off the ground because it requires the corporate elite to actually do something in exchange for their handout from Mommy Government.
Unfortunately... before we know it...
We'll all be lamenting...
"Ich bin ein Detroiter!"
There goes those $200k per year retirees. ...welcome to SNAP! you fucking bloodsuckers
No shit. You were expecting a $5000/month pension check, but now you're getting $800/month. SNAP is right!
Let us not forget the part Bernanke and Greenspan played in destroying pension funds through low interest rates.
I can foresee a "healthcare exchange" in their near-future instead of promised lifetime medical paid by the taxpayers.
It's what happens when the politicians promised more than could be delivered. The unions have powerful political lobbyist.
The post office is a great example of government handling of cutting costs. Instead of taking away Saturdays and reducing costs it's keep raising the prices until nobody want the service anymore.
The union's solution is to keep raising prices (taxes, stamps, fees) until it's economically impractical.
The unions had political power, now they are no more than cannon fodder at election time. They might have some local clout but even in powerful liberal strongholds that clout is diminishing rapidly.
The State is a violent liar?
You mean...Rothbard... was right?
"It was a function of the mathematics,"
NO SHIT...?
Mathmatics was done away with in 2009 along with mark to market. HFT computers take 85 billion a month and buy ever smaller volume of ever more expensive stocks, mathmatically that has an end.
Kenneth Buckfire,
You should suggest that the 'establishment' serve the people by updating these WSJ and NYT histories
http://www.showrealhist.com/begun.gif
http://www.nytimes.com/imagepages/2006/08/26/weekinreview/27leon_graph2....
See here for up to date
http://www.showrealhist.com/RHandRD.html
This is a clear warning shot to anyone (govt workers, firefighters, Boeing employees) who is counting on their sweet pension to provide for them for 30-40 years. Odds of that happening? Very small.
Especially when, year after year, the public employees received raise after raise as the economic fundamentals of the city grew worse and worse.
They didn't care: "I got mines!" was the common brag.
Well, you're getting yours now pal. How's that feel?
Most companies calculate pensions using recent years' base pay. Some California municipalities have allowed "spiking", where an employee works massive hours of overtime in the last year of employment, and the pension is based, not on base pay, but on total pay of the highest year. The public union bosses have a "fuck 'em" attitude toward the taxpayers.
If you step back and look at the Big JPG, you will realize that this only fuels FRB and the Dollar Ponzi.
All wars and all scams are ultimately Bankers' wars and scams, as ALL currency (hence Debt!) supply originates with them.
Yet even now, only a small group on ZH realize this, as the majority gets constantly distracted and redirected to a myriad of false (red herring) arguments, and are happy to be at each other's throats.
the solution remains one of bail-out to make pensioners whole, over a longer time frame.
there may be good reasons why false political promises should result in prosecution of politiicians who made them and who wilfully underfunded pensions to pay their political allies...but given that a system of prosecution exisits and nobody chooses to use it, we are left with clear evidence that the banking sector receives a bail-out...whilst people who need pensions to live on...dont get a bail out.
similarly, banks get an unlimited amount of zero funding from the Fed to game government debt yield curves..and pensioners ...dont
the solution for pensions deficit is every bit as valid for pensioners as it is for bankers...get the government and central bank to "kick the can" down the road.
it is possbile to allocate a similar amount ($50,000 per man woman and child in the US over the last five years for the banking system) to just those people who are in underfunded pensions...that is...make them whole now and pay for it over a longer term.
that is, fix the problem by taking the debt onto the federal budget and create an investment program to retire the deficits of states/citites etc over a 50-100 year time frame, rather than the 10-30 year time frame for which the pensions fall due and the deficits "crystallize".
if ever there was a clear and present danger to lives of americans...this is it...people have to choose...use a similar model that has been used to fix the banks...or let people die sooner than they would otherwise from worse health care, diet and quality of life.
Interesting. But fuck trying to "restructure" these plans, etc., so that they work over a longer time period. Throw them out. The math doesn't work, let's not pretend it can be fixed over a hundred years. Build more Wal-Marts and extend the soup line. But don't try and make these pension plans work - they don't. Politicians deserve blame yes, but how about their own unions? They've been exhorting the taxpayer and politiicans for decades. What responsibility to they have?
you are right of course..and it should be impossible to try and defend an indefensible position..i think that a solution could be found..over a long term, so that people don't suffer a 16 cents in the pension dollar outcome.
detroit may be following the path of just one solution and be the canary in the coalmine for the state of ALL pension plans in todays dollars.. morality is brought into question..why can't the fed print money for pension funds rather than banks? aren't pension plans systemically important institutions?
its a defintional point too...what counts as systemically important? banks that, if they failed, would slow the economy down to breaking point? or pensioner income, all of which is spent in the economy as pensioners move to draw down of capital (minus the massive, bogus and fat fees charged by the monopolistic pricing of pensions by annuity providers) .
i suggest that pensioners spend pensions in sectors of the economy that provide the bedrock of profits for almost all americna companies...banks....do not, they recycle fed dollars, again in a monopolistic manner, ripping off users of the financial systems.
banks do it forever...pensioners only receive benefits for 20 years..temporal adjustment to a 50 year solution reduces imminent stress.
12,338 retired California government workers receive pensions in excess of $100,000 from CalPERS (the highest of which is more than $30K/month)
6,609 retired California State Teachers receive pensions in excess of $100,000 from CalSTRS (the highest of which is in excess of $25K/month)
2,129 retired University of California Employees receive pensions in excess of $100,000 from the University of California Retirement Plan (the highest of which is in excess of $28K/month)
http://www.fixpensionsfirst.com/100k-pension-club/
This list off course doesn't include the other 219,996 active state employees that are expecting to receive their fair share as well.
http://www.sco.ca.gov/ppsd_empinfo_demo.html
I understand that Calpers is directly challenging the bankruptcy of Sacramento and want a compete investigation of all holdings and assets to date. They know the handwriting is on the wall, though. I'm not trying to justify exhorbitant and outrageous pension benefits. I think those types of benefits should be examined in court and the proper politicians who cut those deals hung on a cross. You can get angry as you want to with public union workers, but the truth of the matter is someone somewhere said "oh sure no problem" to union demands and they should be held accountable.
" ... the truth of the matter is someone somewhere said 'oh sure no problem' to union demands and they should be held accountable."
Tired of all this, "Oh, the poooooor pensioners." The dotgov employees bribed that 'someone somewhere' to say, "Oh, sure, no problem."
I do agree that that someone should be held accountable, but I also believe that the dotgov thugs should be held accountable for their perfidy; viz., their unending and callous rape of the private sector.
"the solution for pensions deficit is every bit as valid for pensioners as it is for bankers . . ."
The solution is ever bit as INvalid for (certain groups especially of) pensioners as it is for bankers. TPTB have stolen the capital of the savers that many/most planned to retire on and given it to the bankers.
The PBGC has taken over many pension systems and the pensioners have received a SMALL percentage of the pensions they were promised. Why the fuck do retired public employees deserve more than an auto worker or a retired airline employee?
Why should I pay for this shit just because I saved a little FOR MY RETIREMENT (the only pension I get) every year? Why not make the bankers and their ilk pay instead? They're the ones that got the loot.
agreed 100%..but you know the banks are enjoying all the benefits of a fucked up system and government is saying...fuck the pensioners..i mean these are people..your parents, uncles and so on..not bankers
i see these two issues of two sides of the same coin..corruption and very very poor logic of certain to fail "experiments" in social/financial ivory towers that make people go hungry on the long term
You may be on to something with this - "longer time frame".
Just delay all pension payments for 75 years - problem solved.
hooligan, I hope you just forgot the sarc note.
It sounds like a good plan for your grand-kids, but not mine.
Let the contracts and legal system do its job today. Let everyone know where they stand and start new from that point.
thanks for the down arrows! dealing in sarcasm opens the spigots a lot...seriously though..why should it be less valid to pay old people what they were promised...and to be clear...the pensioners get paid and a resolution trust company of some sort works off the debt over a different time period that is unrelated to the pensioners.
i say, the logic for doing that is exactly the same as the logic for the currently in force bank bail-out..pay cash over now to banks and work out the repayments (government debt) over decades.
both pay tax on profits so you get some claw back...but hey...come on..you should know that i think banks, polticians and the benefit system are a sure fire model to bankrupt the nation and that this is facilitated by the fed...why should pensioners not benefit from the same failures everyone else has to fuck honest people over?
if the answer is for pension problems is "let them eat cake" my point was that banks should also have a slice of the same..
:)
Apparently the Constitution of the State of Michigan requires than pensions be paid. Does this mean that if Detroit can't pay them then the State of Michigan must?
Good question. Because way back all the government unions pushed to get that requirement into state pensions.
If it goes to the state they'll just keep increasing taxes and pushing businesses out.
In full or will 1/6th do?
The case can be made of fraudulent actions by the city (faulty assumptions, gross mismanagement) and the State having no oversight capabilities yet given responsibilities. Also, the constitiution can be changed.
"Also, the constitiution can be changed."
Oh. You mean by a vote?
You mean the vote where 139 government employees and welfare recipients and the hundred in the private sector get to decide?
Ha. Ha, ha, ha. Ha, ha, ha, ha, ha.
The flaw in all these state "constitutional mandates" to pay pensions is that Federal bankruptcy law trumps any state mandates. Federal bankruptcy law is explicitly mentioned in the Constitution, which is why the Michigan mandate is impotent. When Detroit declared bankruptcy, Federal law took over.
Bullish for Sec.8 rentals.
As someone who is to the LEFT of 99.99% ZH readers, I wholly agree. PUBLIC pensions are a fraud. These like CEOs compensations are never negotiated in good faith.
Public Unions are right-wing institutions, they support neo-liberals, fuck them.
I wasn't aware that public unions were right wing. I thought JFK was the one who allowed them to organize.
FYI, these public unions routinely and overwhelmingly vote democrat, who in turn give the unions more $$ for the votes.
It's a vicous cycle with a predictable end.
Welcome to Detroit.
Public unions are right wing? You know nothing. My wife is a teacher and the teacher's union is about as left-wing as you can get.
Once in 2008, I was at a school event and used the faculty bathroom. Posted in the stall was a letter from the principal exhorting the teachers to mobilize their votes for Obama. My point is that the entire public school establishment is 90% rabidly liberal/progressive.
Oh, sorry, I meant to respond to the post that you responded to....
Right on. The ball and chain is a retired teach. They love the kool-aid.
Of course, now she is crying about healthscamcare.
"But, I thought it was free."
She is a good cook, however.
Union leaders could learn a lot of things from JFK, like ballistics, and cranial blunt force trauma effects….
What the fuck's the difference whether ALL THE MONEY'S stolen by the Democrat public union members and their co-conspirators or the Republican bankers and their ilk? For the rest of us that don't belong to either group of thieving bastards, the money's gone. It was OUR SAVINGS they stole. The only difference was the way they stole it.
"The Republican bankers?!?"
Are you fucking kidding me?
Is that anything like the Republican Health Insurance companies?
Tell me. Who is the Secretary of the Treasury? Chair of the Federal Reserve? How many times has Jamie Dimon been to the White House in the past few years?
Man, and I thought that I allowed *my* prejudices to delude me.
It's a tradition. Do you think JP Morgan was a Democrat?
"Is that anything like the Republican Health Insurance companies?"
Yep, another group of rich, thieving motherfuckers.
"Tell me. Who is the Secretary of the Treasury?"
Jacob J. Lew. His father was an immigrant Polish Joo. I suppose that makes him a dual Israeli-American citizen.
"Chair of the Federal Reserve?"
Ben Shalom Bernanke. He was appointed by George W. Bush, a Republican. He has dual Israeli-American citizenship thanks to his grandparents, who immigrated from what is now Ukraine in 1921.
"How many times has Jamie Dimon been to the White House in the past few years?"
I don't know. You got me on that one. How many is a "few"?
Who so you think the Republicans REALLY REPRESENT? The working man? (FWIW, I don't believe the Democrats represent the working man either.)
You misunderstand. There is no group I loathe more than the GOPe. Except for Democrats.
I had simply taken umbrage at your hackneyed portrayal of Republicans as being the tools of Big Business/Big Finance, and the Democrats as, well, not.
Give me a break. About the only difference that I can see between, oh, say, Nancy Pelosi and Mr. Boner is that the latter does not go out of his way to publically insult my values and religion. Not that I believe that either Pelosi or Boehner have any sincere beliefs on the subject of values, morals, or religion, or, if they did, that they would differ in any significant particular, but at least one does not go out of his way to insult and demonize me.
So, one party has better manners than the other. I wish the differences went deeper, but, if that's all there is, well, then, the party with the better manners gets what little allegience I can muster.
The Republicans ARE the tools of "Big Business/Big Finance" or (my preferential term) Big Crime. So are the Democrats. They both follow the money and that's where the money is. I don't see how either is any worse than the other.
In other words, the problem is government. Now, where have I heard that before?
Hint: From a Republican.
Many seem to feel that there is no difference between the two parties, and I certainly understand why someone might feel that way. But I know there is a difference. It doesn't lie so much at the top, but in the rank and file.
Republicans dumped Mike Castle and Charlie Crist. Disregarded the GOPe's orders on Ted Cruz. Love him or hate him, no one can deny that THAT is a BIG difference between the parties. I have never seen Democrats reject Party orders. In fact, Democrats are to be admired for their party discipline. (Not quite sure "admired" is the word, but their lockstep uniformity is impressive.)
I don't understand your last sentence. Could you elaborate?
The Democrat party as it exits now is a neoliberal party: it supports FREE trade, globalism, no accountability for corporate behavior and foremost it's a party of BIG BUSINESS. Essentially the Democrat Party is what the Republican Party was in 1970-1980s. In fact, NIxon was more Liberal than Obama.
During 1980s, public unions such as those representing Police and Fireman helped elect Ronald Regan. As a matter of fact, PRIVATE unions membership was mostly made up of red-necks: UAW, Teamsters etc, but, I have no problem with Private Unions--its a matter between them and business.
Just because Public Unions overwhelmingly vote for Democrats, it does not mean they support Liberalism ----it's a matter of pragmatic convenience. Public Unions are like Trade Associations, they just represent their own interests which only means more Public money for them.
True smartstrike.
Fascinating (in a depraved way) to watch people cry, vote and passionately rejoice when their man gets into office and they are getting shafted by their own vote.
The unions are not celebrating now.
I remember riding my bike pre-2012 election. They neighborhood is middle to upper middle class. I would be 80% voted Republican. I came acoss one house with Obama lawn signs. All brand new pickups. My guess is it was a family of fireman or city/county govt workers. I have no sympathy when these pensions blow up because these people bleed taxpayers and homeowners to death.
Cocaine is a hell of a drug, methinks.
Public sector unions are right-wing institutions? The OP is either on the real Good Shit, or is so far to the left he lands just right of Karl Marx's nutsack.
JFK (as someone above pointed out, he allowed public workers to organize) would be a right-wing nutjob Teatard to today's Democrats.
Obviously you are not as balanced as you think you are?
Fact is, JFK would be a right-wing nutjob to today's Republicans.
You're asserting that the SEIU is a right wing organization?
?
Who the hell are you to assume anything about the readers here I AM NEITHER LEFT nor RIGHT. I am a normal person and Ambidexterous and going the correct human way. Correct??????
If you assume too much you are definately WRONG.